New-home sales pick up sharply

Sales of new single-family homes increased 39.4 percent in May, reaching a seasonally adjusted annual rate of 488,000, up from April's 350,000, the government said.

Merrill Butler, president of the National Association of Home Builders, attributed the increased sales to declining mortgage rates, now around 12 percent, which reduce the average monthly payments on a $60,000, 30-year loan by almost $200.

However, Mr. Butler warned the sales rate was still 39 percent below the rate of a year ago and that any rebound in new home construction was months away -- possibly not until late in the year.

The median price of a home in the United States in May was $62,600, down from April's $63,200.